Cullumber Diners Inc. charges an initial franchise fee of $147000 broken down as follows: Rights to...
Cullumber Diners Inc. charges an initial franchise fee of
$147000 broken down as follows:
| Rights to trade name, market area, and proprietary know-how | $69000 |
| Training services | 12000 |
| Equipment (cost of $16100) | 66000 |
| Total initial franchise fee | $147000 |
Upon signing of the agreement, a payment of $69000 is due.
Thereafter, 2 annual payments of $39000 are required. The credit
rating of the franchisee is such that it would have to pay interest
of 8% to borrow money. The franchise agreement is signed on August
1, 2021, and the franchise commences operation on November 1, 2021.
Assuming that no future services are required by the franchisor
once the franchise begins operations, the entry on November 1, 2021
would include
| a credit to Service Revenue for $12000. |
| a credit to Unearned Franchise Revenue for $69000. |
| a debit to Unearned Franchise Revenue for $69000. |
| a credit to Sales Revenue for $66000. |
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Cullumber Diners Inc. charges an initial franchise fee of
$147000 broken down as follows:
Rights to...
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required of the franchisor....
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